Hundreds of Chinese companies have unveiled their earnings guidance, revealing a challenging financial landscape. Despite official statistics showing the economy growing at the government's targeted pace, the earnings outlook suggests many companies are struggling. An analysis by Nikkei Asia found widespread weakness in annual earnings previews from Chinese listed companies, indicating a contrast between corporate performance and official economic data.
The earnings guidance, released simultaneously on the same evening by over 500 companies listed in Shanghai and Shenzhen, paints a stark picture. Most companies anticipate reporting either net losses or narrowing profits compared to the previous year. This revelation has raised concerns about the underlying health of China's corporate sector, despite the optimistic GDP figures.
In contrast to the corporate earnings guidance, China's statistics department reported that the country's economy expanded by 5% in 2024. The pace of economic growth accelerated in the final quarter of 2024, reaching 5.4%. These figures suggest a relatively solid economy, aligning with the government's growth targets.
However, the discrepancy between the official GDP data and the earnings guidance from Chinese companies highlights potential challenges within various sectors. While the economy appears robust at a macro level, individual companies are facing difficulties that could impact future growth.
Nikkei Asia's analysis underscores this divergence, identifying broad weakness in earnings forecasts across a wide range of industries. The findings suggest that while the overall economy is growing, many businesses are grappling with issues such as rising costs, regulatory pressures, and shifting market dynamics.
The release of earnings guidance from Shanghai and Shenzhen-listed companies on the same evening has drawn significant attention. It provides a snapshot of corporate sentiment and indicates potential headwinds for China's economic trajectory in the coming year.